Wells Fargo Fined By FINRA over Alleged Supervisory Failures

According to a report published by Investment News in December 2016, the Financial Industry Regulatory Authority (FINRA) has fined Wells Fargo $1 million in connection to the broker-dealer’s alleged supervisory failures. Fitapelli Kurta is interested in speaking to investors who have complaints regarding Wells Fargo Advisors, now known as Well Fargo Clearing Services.

Wells Fargo Clearing Services maintains its principal place of business in St. Louis, Missouri and operates more than 7,000 branches, with almost 27,000 registered representatives. According to FINRA’s complaint, the firm “failed to establish, maintain, and enforce reasonable supervisory systems for the use of consolidated reports generated by their registered representatives through a particular application (the “Application”) that the Firms made available to their registered representatives.” It also allegedly “ailed to review the content of the consolidated reports generated using the Application (the “Application Reports”), including customized values for assets and accounts held away from the Firms” and “failed to provide a mechanism allowing their representatives to designate which Application Reports were actually provided to customers.” Although the firm’s systems were designed to review customer communications, the records in question were allegedly not subjected to these systems.

For reference, FINRA’s findings define a “consolidated report” thusly: “A consolidated report is a document provided by a broker to a customer that combines account information regarding a customer’s financial holdings, regardless of where those assets are held. Consolidated reports supplement, but do not replace, the customer account statements required pursuant to NASD Rule 2340. FINRA Regulatory Notice 10-19 reminds member firms that consolidated reports are communications with the public and therefore must be clear, accurate, and not misleading pursuant to FINRA Rule 2210(d)(1), which describes the content standards applicable to such communications.”

According to FINRA’s findings, Wells Fargo’s representatives “prepared or generated more than 5,000,000 Application Reports” during the period in question, but “reviewed a random sampling of only 2% of the Application Reports.” Furthermore: “The Firms reviewed only the cover sheets, focusing on grammatical errors, customer contact information, the last date the Application Report was generated, and whether the Application Reports had the required disclosures. WFA and WFAFN did not, and had no system in place to, review the contents of the Application Reports, including information about customers’ holdings away from the Firms.”

Wells Fargo has signed a letter of Acceptance, Waiver and Consent (AWC No. 2015043740201) agreeing to a fine of $1 million, but neither admitting nor denying the findings.

If you or someone you know has a complaint regarding Wells Fargo Advisors, now known as Well Fargo Clearing Services, call Fitapelli Kurta at 877-238-4175 for a free consultation. You may be eligible to recoup lost funds. Fitapelli Kurta accepts every case on contingency: we only get paid if and when you collect money. Time to file your claim may be limited, so we recommend you avoid delay. Call 877-238-4175 now to speak to an attorney for free.